The Beny Steinmetz Group

© Moshe Shai/Keystone
All the key people in the Beny Steinmetz Group (BSG) who are the object of an investi-gation in relation to the acquisition of mining rights in Guinea live either on the shores of Lake Geneva or just next door in France. On 18 October 2013, the company’s founder Steinmetz was invited to appear before the public prosecutor in Geneva for the first time. Public Eye’s research shows that the Israeli billionaire constructed an extremely complicated web of companies, which he controls from Geneva. The use of this sophisticated network of entities, a practice typical of commodities companies based in Switzerland, serves two purposes: to circumvent legal responsibility and evade the reach of the tax authorities.

The judicial authorities of six countries, including Switzerland, have been investigating the case since 2013. Following requests for legal assistance from the United States and Guinea, in August 2013, Geneva’s public prosecutor launched an investigation into allegations of bribery of foreign officials. Geneva also hosts the control centre of a convoluted network of offshore companies. Investigations are underway into allegations that bribes were paid to one of the wives of the former president of Guinea in order to obtain licences for the high-value iron ore deposits at Simandou – for which Steinmetz paid a mere US$165 million in 2009. The next year the Brazilian mining giant Vale bought 51% of the shares of the company that owned the licences for US$2.5 billion. That money should have gone to Guinea’s government coffers.

© Public Eye
The BSG organisational chart reconstructed by Public Eye (then the Berne Declaration) demonstrates the ex-traordinary difficulties faced by tax and investigating authorities when conducting enquiries into such convo-luted groups (click to enlarge).

The BSG case shows the urgent need for payment transparency in the natural resources sector. It is also a textbook case study in how tax havens are systematically used to conceal illegal activities in developing countries with poor governance and regulatory systems. To put a stop to these affairs, Swiss commercial registers need to publicly state the ownership and beneficiaries of corporate entities.

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